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Maximizing Value in Community Development

AUSTIN, Texas--(BUSINESS WIRE)--Jan. 28, 2016--
Forestar Group Inc. (NYSE: FOR) (“Forestar” or the “Company”) announced
today that its management and Board of Directors have determined that
the Company’s multifamily business is non-core. As a result, Forestar
intends to opportunistically exit the Company’s multifamily portfolio
and will no longer allocate capital to new communities in this business.

The Company also announced today that in fourth quarter 2015 it
completed the sale of Midtown Cedar Hill, a 354-unit multifamily project
near Dallas, for approximately $43 million, generating over $17 million
of net cash after repayment of approximately $24 million of debt. The
sale contributed approximately $9 million to segment earnings.

Additionally, Forestar has retained CBRE Group, Inc. as the exclusive
agent to sell Eleven, a 257-unit Class A multifamily property in
downtown Austin.

“Opportunistically exiting the multifamily business is a positive step
forward toward our goals of exiting non-core assets and reducing
operating expenses. These actions, once fully implemented, are expected
to reduce annual operating costs by over $5 million,” said Phil Weber,
Chief Executive Officer.

There can be no assurance regarding the likelihood or timing of any
specific transaction or transactions.

About Forestar Group

Forestar Group Inc. operates in three business segments: real estate,
oil and gas and other natural resources. At third quarter-end 2015, the
real estate segment owns directly or through ventures 106,000 acres of
real estate located in 12 states and 15 markets in the U.S. The real
estate segment has 11 real estate projects representing approximately
24,400 acres currently in the entitlement process, and 80 entitled,
developed and under development projects in 11 states and 14 markets
encompassing 10,700 acres, comprised of 17,400 planned residential lots
and approximately 1,900 commercial acres. The oil and gas segment
includes approximately 914,000 net acres of oil and gas mineral
interests, with approximately 590,000 acres of fee ownership located
principally in Texas, Louisiana, Georgia, and Alabama, and approximately
324,000 net acres of leasehold interests principally located in
Nebraska, Kansas, Oklahoma, North Dakota and Texas. These leasehold
interests include about 9,000 net mineral acres in the core of the
prolific Bakken and Three Forks formations. The other natural resources
segment includes sale of wood fiber and management of our recreational
leases, and approximately 1.5 million acres of groundwater resources,
including a 45% nonparticipating royalty interest in groundwater rights
on approximately 1.4 million surface acres in Texas, Louisiana, Georgia
and Alabama and groundwater production from leases on about 20,000
surface acres in central Texas. Forestar’s address on the World Wide Web
is www.forestargroup.com.

Forward-Looking Statements

This release contains “forward-looking statements” within the meaning of
the federal securities laws. Forward-looking statements are typically
identified by words or phrases such as “will,” “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,”
and other words and terms of similar meaning. These statements reflect
management’s current views with respect to future events and are subject
to risk and uncertainties. We note that a variety of factors and
uncertainties could cause our actual results to differ significantly
from the results discussed in the forward-looking statements, including
but not limited to: general economic, market, or business conditions;
changes in commodity prices; opportunities (or lack thereof) that may be
presented to us and that we may pursue; fluctuations in costs and
expenses including development costs; demand for new housing, including
impacts from mortgage credit rates or availability; lengthy and
uncertain entitlement processes; cyclicality of our businesses; accuracy
of accounting assumptions; competitive actions by other companies;
changes in laws or regulations; and other factors, many of which are
beyond our control. Except as required by law, we expressly disclaim any
obligation to publicly revise any forward-looking statements contained
in this news release to reflect the occurrence of events after the date
of this news release.